Brexit carries risks for Britain, says Iswaran

The Canary Wharf business, financial and shopping district in London. Mr Iswaran pointed out that if Britain were to exit the European Union, many Singapore businesses looking at Britain as a way to enter the EU will have to recalculate, and that would be the most significant shift.PHOTO: BLOOMBERG

S'pore businesses and property investors are likely to re-evaluate investments, he warns

Minister for Trade and Industry (Industry) S. Iswaran has given a blunt assessment of the risks for Britain should it exit the European Union (EU) in a vote next month.

He said Singapore businesses and property investors would likely re-evaluate investments there if Britons voted to leave the EU.

"If the UK were to exit the EU, many of our businesses looking at the UK as a way to enter the EU will now have to recalculate. That would be the most significant shift," he said on the impact of the the potential "Brexit".

"Bilateral trade will occur, but for anyone thinking 'Where do I set up shop to tackle a wider region?', especially from this part of the world, they will have to rethink it."

Mr Iswaran was answering a question from a member of the audience yesterday at the Europe Day luncheon organised by the European Chamber of Commerce to mark the EU's 66th anniversary.

While Mr Iswaran emphasised that "there's only one view that matters and that's the view of the British people", he put forward his perspective shaped by his experience as trade minister."If Britain were to exit, they would have to work very hard to restore the benefits of connectivity, not from a logistics sense but an economic sense," he said.

"One side is making a strong argument about how these connectivity elements can be restored, he said, but cautioned that "our experience in negotiating trade deals (shows it) isn't as straightforward".

He added: "We are still waiting for the Singapore-EU free trade agreement (FTA) to be ratified. I'm not sure how long it would take if they (Britain) left."

The EU is Singapore's No. 3 trading partner and Singapore's largest investor, accounting for nearly a quarter of total foreign direct investment. While the EU-Singapore FTA was concluded in 2012, it is pending ratification.

Mr Scott Wightman, the British High Commissioner to Singapore, said the delay was not a "fundamental questioning of the substance of the agreement but a technical question of legal competences". The European Court of Justice is set to give its view on this next year, he said.

On the question of Brexit, Mr Wightman firmly agreed with Mr Iswaran. Negotiating trade agreements take a long time, he said, adding that British goods could then be subject to tariffs.

The British High Commission is encouraging roughly 30,000 British citizens here to register online before June 16 to vote in the referendum, slated for June 23.

Mr Mark Laudi, chief executive of Hongbao Media, said he was "thrilled" by Mr Iswaran's candour.

"Reform in the EU is necessary, but to ditch it... is a monumental and historic mistake," he said, adding that "what the minister said really resonated with everyone here in the room".

Yesterday, the International Monetary Fund capped a week of warnings by supporters of Britain staying in the EU. A vote to leave the bloc could lead to a "protracted period of heightened uncertainty", the IMF said in its Article IV report on Britain published yesterday.

It added that the process of a renegotiation of Britain's trading relationships "could well remain unresolved for years, weighing heavily on investment and economic sentiment during the interim and depressing output".

A version of this article appeared in the print edition of The Straits Times on May 14, 2016, with the headline 'Brexit carries risks for Britain, says Iswaran'. Print Edition | Subscribe

The Straits Times

We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.